BEFORE THE HARYANA ELECTRICITY REGULATORY COMMISSION

BAYS No. 33-36, SECTOR-4, PANCHKULA- 134112, HARYANA

Case No. HERC / Pet 17 of 2012
Date of Hearing
Date of Order

: 06.11.2012
: 29.11.2012

IN THE MATTER OF:

Application seeking clarification on the Energy Billing of
Large Industrial Consumers in pursuance to Haryana
Electricity Regulatory Commissions order on the ARR and
Distribution & Retail Tariff for FY 2012-13 dated 31.03.2012
Faridabad Industries Association (FIA)
through its authorized signatory Col..Sheilendra Kappor (Retd.),
Executive Director.
- Petitioner.
Versus
Dakshin Haryana Bijli Vitran Nigam limited (DHBVNL)

Respondent.

Present:

1. On behalf of the Petitioner:

Shri R.K. Jain, Adviser / Power, FIA.

2. On behalf of the Respondent:

Shri Y.K.B Sharma SE/RA, DHBVNL.
Shri K.K. Gupta, SE/Commercial, DHBVNL.
Shri Guranchal Singh, Consultant, DHBVNL.
Coram:
Shri R.N. Prasher

Chairman

Shri Rohtash Dahiya

Member

Shri Ram pal

Member

ORDER
1. The Petitioner, Faridabad Industries Association (hereinafter referred to as FIA or the
Petitioner) had submitted that this Commission passed order dated 31.03.2012 on ARR
of UHBVNL & DHBVNL for their Distribution & Retail Supply Business for FY 2012-13
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wherein the Commission, for the first time, introduced kVAh based tariff for the Large
Industrial Category of consumers. The relevant extract of the said order is reproduced
below:4.3 (ii) As a further refinement to the tariff design the Commission has changed the
basis of energy charges for HT Industrial consumers from kWh to kVAh basis. The
Commission observes that one of the basic objectives of tariff design is to bring
improvement in efficiency. Much of the HT and LT machinery load of the Industrial
consumers requires matching generation of reactive energy unless compensated by
installing capacitors at the load end itself. Unless fully compensated the reactive load
reduces the power factor and increases the current for the given load thereby power lost
and dissipated in the form of heat add to the losses of the distribution system as well as
results into under utilization of the generating capacity and low voltage problem. Keeping
in view the above discussions the Commission considered it appropriate to introduce
kVAh based energy charges for HT Industrial consumers as well as existing LT Industrial
consumers with connected load above 50 KW up to 70 KW who have not so far
converted to HT supply.

The Petitioner has submitted that the above has resulted in an error regarding
adjustment / billing for the power purchased through Open Access as the scheduling and
billing of such power is on MWh basis by the Northern Region Load Dispatch Centre
(NRLDC). Additionally, it was submitted that the Respondent i.e. DHBVNL is adjusting
Open Access power though scheduled in MWh to KVAh by arbitrarily assuming the
power factor of the Open Access power as unity. Thereby the Open Access consumers
are being overcharged on account of lesser adjustment of open access power.

1.1

It was further submitted by the Petitioner that the Respondent is recovering the

Fuel Surcharge Adjustment (FSA) from them based on KVAh consumption of each
month as against Paisa / kWh determined by the Commission.

1.2 The Petitioner also submitted that the Respondent is charging Electricity Duty (ED)
and Municipal Tax (MT) on the basis of KVAH readings instead of kWh readings as
stipulated in the Punjab Electricity (Duty) Act, 1958 (as applicable to the State of
Haryana and Haryana Municipal Act, 1973.
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2. Prayer:

In view of the above submissions, the Petitioner has made the following specific prayers
for consideration and order of the Commission.

i) Lay down the procedure for adjustment of Open Access power in monthly bills of the
Open Access consumers.

ii) Give appropriate directions to the Respondent to prepare the monthly electricity bills
of the Open Access consumers and adjust the power purchased through Open Access
by taking the average monthly power factor for conversion of kWh to KVAh instead of
assuming unity power factor.

iii) Give necessary directions to the Respondent to calculate other charges such as ED,
MT and FSA on the basis of kWh consumption.

iv) Direct the Respondent to amend the monthly electricity bills already issued for the
previous period commencing 1st April, 2012.
3. Written Submissions of DHBVNL:

3.1 The respondent, DHBVNL, filed a written response vide their memo no. Ch.64/SE/RA404 dated 31.10.2012 to the issues raised by the Petitioner. They are briefly
reproduced below:-

The respondent has referred to the hearing held on 14.09.2012 on similar issues raised
by HVPNL including the practical difficulties related to correct billing of Open Access
consumers. Since the matter is sub judice the Respondent has chosen not to submit
any point wise reply to the petition filed by FIA. However, the Respondent has
requested the Commission to call for a public hearing to discuss the issues pertaining
to the billing of Open Access consumers. Further they have requested the Commission
to provide a solution for accounting for all the components of an embedded Open
Access consumers energy bill in the same unit.
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4.

Public Proceedings:

4.1

The Commission scheduled a hearing of the parties on 06.11.2012, and heard

both the parties at length.

4.2

Shri R.K. Jain, the Ld. Counsel, appearing on behalf of the Petitioner Faridabad

Industries Association argued at length assailing the billing of Open Access embedded
consumers by the Respondent. He submitted that embedded Open Access consumer
has been defined under Regulation 3 (11) of the Haryana Electricity Regulatory
Commission (Terms & Conditions for grant of connectivity and open access for Intra
State transmission and distribution system) Regulations, 2012 as reads as under:

embedded open access consumer means a consumer who has a supply agreement
with the distribution licensee in whose area of supply the consumer is located and
avails the option of drawing power from any other person under open access during a
day or more in any month or more than a month during the year, without ceasing to be
a consumer of the said distribution licensee and continues to pay various charges as
per tariff schedule.

The Ld. Counsel further submitted that for the aforesaid category of consumers there is
a joint metering which records the total energy drawl by the consumer during a given
period. The reactive energy drawl by such embedded open access consumers cannot
be segregated.

In support of the above arguments the Ld. Counsel relied on Regulation 43 & 44 of the
Haryana Electricity Regulatory Commission (Terms & Conditions for grant of
connectivity and open access for Intra State transmission and distribution system)
Regulations, 2012. The relevant regulations cited by the Ld. Counsel are reproduced
below:

43 Settlement of Energy at drawl point in respect of embedded consumer:

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The mechanism for settlement of Energy at drawl point in respect of embedded open
access consumer shall be as under;

Out of recorded drawl the scheduled entitlement as an open access consumer will first
be adjusted and balance will be treated as his drawl from the distribution licensee.

44. Charges applicable to embedded consumers

(1) Embedded open access consumer shall pay all other charges such as transmission
charges, cross subsidy surcharge, additional surcharge, composite operating charges
etc. in accordance with the methodology specified for other short term open access
consumers in these regulations.

(2) Embedded open access consumer shall pay wheeling charges as determined by the
Commission for the relevant financial year.

(3) Besides above charges in respect of open access, the embedded consumer shall
continue to pay other charges namely demand / fixed charges, minimum monthly
consumption charges etc. applicable to them as per the rates determined by the
Commission in the tariff order for the relevant tariff year.

Provided that energy charges shall be payable at the balance energy / consumption
calculated as per energy settlement mechanism provided in these regulations.

In view of the above provisions the Ld. Counsel Shri Jain argued that they are regular
electricity consumers of the Respondent and also frequently draw power through Open
Access on the basis of day ahead scheduling. He argued that there is no meter
available that can segregate the reactive energy drawl / injection with reference to the
Open Access power. The ABT meter records kWh drawn in each 15 minutes time block
and average frequency in that time block. However, the reactive energy drawl is
registered on a monthly basis. Thus, the Ld. Counsel concluded that the only relevant
figure available from the ABT meter is the kWh drawl for each time block of 15 minutes
and average power factor. Hence, the only option available to adjust open access
power is to interpolate the energy drawn by the Open Access consumer from the Grid
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and through Open Access mechanism is on the basis of the average power factor of the
relevant month.

The Ld. Counsel Shri Jain, brought to the notice of the Commission the different
methodologies adopted by the field staff of the Respondent while preparing bills for
embedded open access consumers by placing on records bills issued for the month of
July August 2012 for Chhainsa plant and that of Ballabhgarh plant of M/s Starwire
(India) Ltd. While in case of the former the Discom has assumed a power factor of 0.94
for converting kWh reading to kVAH and in case of the latter they have assumed a
power factor of unity for the same purpose.

In view of the technical limitations of the meters, lack of clarity amongst the field staff of
the Respondent and the fact that the tariff order dated 31.03.2012 issued by the
Commission is silent on the method of adjustment of Open Access power in the
monthly energy bills, the Ld. Counsel requested the Commission to issue a clarification
in this regard.

4.3

On the issue of basis of charging FSA, the Ld. Counsel Shri Jain argued that the

Commissions order dated 31.03.2012 at Paragraph 4.5 Table 4.14 on Page No. 115119 has clearly provided the basis of charging FSA from different categories of
consumers including large Industrial Consumers i.e. Paisa / kWh. Hence the
Respondent by billing FSA to the large Industrial Consumers on the basis of kVAh
consumption is not acting in conformity to the order of the Commission which calls for
intervention of the Commission.

4.4

On the issue of charging of ED and MT the Ld. Counsel for the Petitioner relied

on the provisions of the Punjab Electricity (Duty) Act, 1958 (as applicable to the State of
Haryana). The relevant provisions of the Act cited by the Ld. Counsel is re-produced
below:

Section 2(f) unit in relation to the energy means kilowatt hour.

3(1) These shall be levied and paid to the State Government on the energy supplied by
the Board to a consumer or a licensee a duty, to be called the electricity duty, computed
at the following rates,..
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In view of the above the Ld. Counsel argued that the Respondent is charging ED on
kVAh basis which is against the Government notification for charging the same on kWh
basis.

In order to support his arguments on the basis of charging MT, the Ld. Counsel relied on
section 73 of the Haryana Municipal Act, 1973. The relevant provision cited by the is
reproduced below:

73. Collection and payment of tax on consumption of electricity:-

(1) The tax on consumption of electricity referred to in clause (viii) of Section 70 shall be
collected by the Haryana State Electricity Board set up under the Electricity (Supply) Act,
1948; or by any other person, as the case may be, supplying electricity for consumption
in municipal limits and paid to the committee concerned:

Provided that where any person generates electricity for his own use or consumption it
shall be paid by such person.

(2) Such tax shall be collected and paid in the same manner as if it were electricity duty
payable to the State Government under the Punjab Electricity (Duty) Act, 1958.

The Ld. Counsel submitted that as against the above mentioned statutory provisions, the
Respondent is charging Municipal Tax on kVAh consumption basis instead of kWh basis
which needs to be corrected forthwith with corresponding relief to the Petitioner.

5.

The Ld. Representative appearing on behalf of the Respondent Nigam i.e.

DHBVNL submitted that the possibility of unity power factor cannot be denied. In support
of this contention he cited that DHBVNLs consumer namely DCM, by controlling their
reactive energy drawl / injection through adequate compensation, are able to achieve
unity power factor. Hence assuming unity power factor for the purpose of billing i.e.
converting kWh consumption to kVAh consumption does not suffer from such infirmity as
the Petitioner would like the Commission to believe. He further argued that inadequate
VAr compensation by the consumer the distribution system owned by the Respondent
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has to bear the brunt of 100% loading and in turn they are required to invest in
installation of capacitor banks. Hence assumption of unity power factor for billing in the
case of embedded open access consumers may be allowed to continue. On the issue of
different methodologies adopted by the field staffs of the Respondent, the Ld.
Representative submitted that no such bills were provided to them by the Petitioner,
hence unless the same is provided to them the same cannot be commented upon.

On the issue of the basis of charging FSA, the Ld. Representative of the Respondent
submitted that the FSA is to be levied as per the sales circular issued by DHBVNL on
the basis of per unit consumption and not KVAh basis. However, he agreed that the
Commissions order provides for levy of FSA on the basis of Paisa / kWh and in the case
of Electricity Duty and Municipal Tax the same is to be charged on per unit basis and as
widely understood per unit also implies per kWh in this case. Thus he conceded that the
bills of the Petitioner who has been charged FSA on the basis of Paisa / kVAh shall be
corrected to that extent and the basis of charging Electricity Duty and Municipal Tax
should have been per kWh basis instead of per kVAh..

On the issue(s) of Electricity Duty and Municipal Tax, the Ld. Representative of the
Respondent argued that these are beyond the purview of the Commission as the same
is decided by the State Government. However, he agreed that per unit and per kWh is
one and the same.
6.

Commissions Analysis & Order:

The Commission has carefully considered the written submissions of the parties as well
as their arguments in the hearing held on 6.11.2012 and has framed the following issues
for its consideration and order:
A. Whether unity power factor can be considered for adjustment of open access power
scheduled and billed in MWh in the monthly bills of the embedded Open Access
consumers.
B. Whether FSA can be levied on the basis of kVAh consumption.
C. Whether ED can be levied on the basis of kVAh consumption.
D. Whether MT can be levied on the basis of kVAh consumption.
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In order to find an answer to the issue framed at A, we have examined the arguments of
the petitioner highlighting the practical aspect i.e. that in the case of an embedded open
access consumer there is a common (joint) metering arrangement which records the
total energy drawl by the consumer during a given period and hence the reactive energy
drawn by such consumer through open access cannot be segregated. The relevant
regulations of HERC (Terms and Conditions for Grant of Connectivity and Open Access
for Intra State Transmission and Distribution System) Regulations, 2012 is reproduced
below:Regulation 43:
Settlement of Energy at drawl point in respect of embedded consumer The
mechanism for settlement of energy at drawl point in respect of embedded open access
consumer shall be as under:
(i) Out of recorded drawl the scheduled entitlement as an open access consumer will
first be adjusted and the balance will be treated as his drawl from the distribution
licensee.
Regulation 44:
(1) Embedded open access consumer shall pay all other charges such as transmission
charges, cross subsidy surcharge, additional surcharges, composite operating charges
etc. in accordance with the methodology specified for other short term open access
consumers in these regulations.
(2) Embedded open access consumers shall pay wheeling charges as determined by
the Commissions for the relevant financial year.
(3) Besides above charges in respect of open access, the embedded consumers shall
continue to pay other charges namely demand / fixed charges, minimum monthly
consumption charges etc. applicable as per the rates determined by the Commissions in
the tariff order for the relevant financial year.
Provided that energy charges shall be applicable at the balance energy / consumption
calculated as per the energy settlement mechanism provided in these regulations.
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It is evident from the above regulations that a settlement mechanism has been
prescribed by the Commission for settlement of energy account of an embedded
consumer who also avails power through open access. Such consumers, in accordance
with the proviso mentioned above pays energy charges as determined by the
Commission only on the balance energy / consumption after reducing his scheduled
drawl through open access. Consequently, despite the fact that the existing metering
arrangement does not support separate recording of energy drawl from open access and
that from the distribution licensee of the area i.e. the respondent, a mechanism exists for
segregation of the same. It is also a fact that given the existing metering arrangement
reactive energy drawl cannot be segregated between Intra State and Inter State
Grid. Further payment / receipt for reactive energy drawl by the petitioner depends on
the prevailing voltage at the metering point as provided for in Clause 5.5 of the Haryana
Grid Code. Therefore, in view of the technical limitations and the fact that the
Commissions order dated 31.03.2012 vide which kVAh tariff was introduced for the HT
Industry category for the first time did not specify the procedure / any mechanism for
aberrations in the case of embedded Open Access consumers, wherein scheduling and
billing of Open Access power is being done by the NRLDC in terms of MWh whereas the
tariff in the case of HT Industry category w.e.f. 1st April, 2012 is in terms of kVAh. Thus a
contradiction has emerged as a part of the energy drawn by Open Access embedded
consumers has to be reckoned with as drawn from Open Access and a part (balance)
from the Distribution licensee, wherein the basis of energy accounting is different. Unity
power factor as cited by the Respondent may be momentarily true in a few isolated
cases but this certainly cannot be considered as a benchmark that could be universally
applied.

The Commission has perused the Schedule of Tariff for Supply of Electricity by UHBVNL
and DHBVNL for FY 2012-13 and observes that for HT supply where kWh based tariff is
applicable i.e. Railway Traction & DMRC, the rebate/surcharge on SOP is with reference
to a power factor of 90% (0.9).

The Commission has also perused the written submission of the Respondent regarding
a similar matter which is pending before the Commission and their suggestion for
holding public hearing to resolve the issue. Regarding this the Commission observes
that ARR and Tariff Petition for FY 2013-14 is shortly due, and the Commission would
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like all embedded Open Access consumers to file their objections /

comments /

suggestions as and when public objections are invited on the same. The Commission, in
view of the difficulties faced by the Open Access consumers as well as the Licensees,
would examine the matter in greater details and pass appropriate order while approving
the ARR/tariff for FY 2013-14.

Till such time the only option available to the Commission is to allow adjustment of Open
Access power arrived at in accordance with provisions of HERC (Terms and Conditions
for Grant of Connectivity and Open Access for Intra State Transmission and
Distribution System) Regulations, 2012, on the basis of 0.90 power factor, the reference
being used for rebate/surcharge on power factor for HT consumers like Railway Traction
and DMRC where tariff is in terms of per kWh or the actual monthly average power
factor whichever is higher. In view of the above discussions the issue framed by us at A
is answered in negative i.e. unity power factor cannot form the basis of adjustment of
Open Access power in monthly bills of the embedded Open Access consumers and the
onus of maintaining power factor closer to unity is that of the consumer.

The Commission has examined the Tariff order dated 31.03.2012 as well as FSA
recovery order(s) issued from time to time and observes that the basis of FSA recovery
is in terms of Paisa / kWh. Hence there ought not to be any difference / dispute
regarding the basis of recovering the same from the consumers including that from the
Petitioner. Hence the issue framed at B is answered in negative i.e. FSA cannot be
levied on the basis of kVAh consumption.

Additionally, the Commission in order to find answers to the issues framed at C and D,
has examined the relevant Acts i.e. Punjab Electricity (Duty) Act, 1958 (as applicable to
the State of Haryana) and Haryana Municipal Act 1973. At the outset the Commission
would like to make it clear that Electricity Duty and Municipal Tax is determined and
levied as per the relevant rules / Act notified by the State Government. However, the
same in the instant case is recovered by the Discoms who are the Licensees of this
Commission. Hence it is the duty of this Commission to ensure that all Acts / Rules etc.
as are applicable in the case of the Licensees are meticulously complied by them in
letter and spirit. In the instant case it is clear from the relevant Act(s) cited by the
Petitioner that Electricity Duty and Municipal Tax are to be levied on kWh consumption
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basis. Hence the issues framed at C & D are answered in negative i.e. kVAh cannot
form the basis of charging Electricity Duty and Municipal Tax.

In view of the above discussions the Commission orders as under:

1. Till such time the Commission issues order for FY 2013-14, the monthly average
power factor or 0.90 (90%) power factor, whichever is higher, shall be reckoned with
for adjustment of open access power in monthly bills of the embedded Open Access
consumers, with prospective effect.
2. In view of the fact that the Respondent, at the argument stage, conceded/ admitted
that the basis of charging FSA, Electricity Duty and Municipal Tax should have been
kWh and not kVAh and also agreed to correct the earlier bills of embedded HT
Industry Open Access consumer category, the Commission orders accordingly.
This order is signed, dated and issued by the Haryana Electricity Regulatory
Commission on 26th November, 2012.

Date: 29/11/ 2012.

Place: Panchkula.

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(Ram Pal)

(Rohtash Dahiya)

(R.N.Prasher)

Member

Member

Chairman